Executive Q&A viewpoint-Dandashly

Hasan Dandashly, President and CEO, Downstream Technology Solutions, GE Oil and Gas

Gas Processing spoke to Hasan Dandashly, president and CEO of Downstream Technology Solutions for GE Oil and Gas, about the role of small-scale LNG in the evolving natural gas marketplace, the challenges and opportunities for implementing small-scale gas processing in different world regions, and the outlook for floating LNG (FLNG).

GP. What do you see as some of the advantages of small-scale LNG vs. large-scale LNG? How is small-scale gas processing transforming the developing world, as well as US infrastructure?

Dandashly. Gas is clearly becoming more abundant in the world. It’s one of the cleanest fuels, and it’s a fairly cost-effective fuel. To capitalize on this gas for many applications—power generation, industry, petrochemical production and transportation—a network is required. Often, the network remains the integral part of connecting the source of gas to the points of consumption, such as power, industry, transportation, etc.

The networks that connect these points are made of pipelines, of which the US has an abundance. However, as we know, building new pipelines is not cheap and is time consuming—they have to go through a lot of regulatory hurdles before they are built. LNG tankers (and CNG tankers, for shorter distances) are another part of the network. They enable gas to be liquefied in one part of the world and then moved to another part of the world for consumption.

However, it takes a while to build networks involving big LNG plants, tankers and pipelines. There are areas where you can speed up the development of the network by liquefying or compressing gas at a small scale, at the point where the gas becomes available, and then transporting it to the point of use. We call this the Virtual Pipeline, with alternative transportation methods, such as trucking, taking the place of physical pipelines (FIG. 1). It supplements the network, and the benefits of that supplement and of the small-scale LNG process are faster speed to market and lower CAPEX, so gas demand can be met quickly and cheaply.

Fig. 1. GE’s Virtual Pipeline uses small-scale LNG production and truck delivery of gas to supplement energy networks at a faster speed to market and lower CAPEX.

There are multiple applications for this technology. In North America, there’s an application in the oil field, which GE has already demonstrated, through a JV with Ferus Natural Gas Fuels, in an agreement with Statoil. In this agreement, the JV is capturing flared gas in the Bakken shale play. We treat the gas, we compress it into CNG using GE technology, and then we move it to the rigs and fracing pumps in the Bakken using Ferus Natural Gas Fuels’ expertise in distribution. This strategy is good for the environment because we’re capturing gas that would be flared otherwise, and we’re also saving our customers money on diesel used to run rigs and fracing pumps.

Other applications for small-scale LNG in North America focus on transportation. With retrofitting, you can use LNG or CNG instead of diesel for heavy-duty trucking, locomotive, marine and mining operations. For some of these vehicles, natural gas can now be both the cargo and the fuel.

Another application in North America is exports. Sometimes there’s less gas available to process, or it’s desirable to begin production at a smaller scale, with the option of expanding operations in the future, as capital allows. Big LNG plants require large input sources of natural gas and require investment in a large, full-capacity system upfront. But when you have a plant that’s assembled from 10 small-scale LNG trains, its operation and maintenance flexibility can be optimized. In the field, it takes a lot less time to put the modules together. Also, one train can be installed at a time, and the system can be scaled up by adding trains as is necessary or financially feasible.

At the international level, it gets very interesting. Small-scale LNG is developing in China and can be implemented within relatively small space constraints (FIG. 2). A lot of transportation in China is driven by natural gas. Since they are developing the market for vehicles and other transportation methods, the demand for new vehicles is higher than in a more saturated market. New vehicles running on natural gas can be sold more easily, which is easier than retrofitting vehicles already on roads. Small-scale LNG also has an advantage in China because, from a regulatory perspective, LNG is taxed and priced differently than regular gasoline, to provide an economic advantage.

Fig. 2. A small-scale LNG plant in China.

In Indonesia, there is a growing need for power and an abundant supply of gas, but transmission grids and pipeline networks are not well developed. Virtual pipeline networks can provide interim, and sometimes permanent, solutions.

Sub-Saharan Africa is another area in which there’s a lot of gas and a big need for power generation, but there isn’t a sufficient pipeline network. In northern Nigeria, many people’s economic struggles are linked closely to a lack of access to power. By liquefying gas on a small scale and transporting it to areas of need, operators can reach key markets they otherwise couldn’t, more quickly and with less capital investment upfront. A pipeline can be difficult to build and maintain, but a Virtual Pipeline can come online faster, enabling greater agility in the network. This, in turn, can provide power to areas where it was previously unavailable or unreliable.

Small-scale LNG is an exciting space. It’s not an “either/or” with regard to large-scale LNG, though; one doesn’t take away from the other. As gas becomes more available and more prevalent, small-scale liquefaction and compression, and the concept of a Virtual Pipeline, add to the network. The large-scale LNG plants will always be able to operate fairly efficiently and cheaply with large volumes of gas, but they take longer to build and can be more expensive than small-scale LNG plants.

GP. In an ideal scenario, how long does it take to set up a Virtual Pipeline network?

Dandashly. A small-scale LNG plant can be built in about a year. So, from when you start planning the project to the time you have the plant down on the ground and producing, it could be as little as 18 months. Of course, to complete the full supply and demand network, transportation logistics, offtake agreements and customer agreements must be in place so that the LNG can be utilized as fuel at the end application.

We can build the plant itself in 9–12 months at the factory, and then it needs to be installed in the field. The modules can be built in many different parts of the world. Likewise, there are major manufacturers for the trucks in many different places.

GP. Small-scale processing solutions offer flexibility, cost effectiveness and speed to market, which are extremely attractive to producers and suppliers, especially in a low-cost environment.

Dandashly. Absolutely. Small-scale LNG does meet those needs. I think the discussion is also moving toward how traditional LNG can utilize modularity to achieve greater cost effectiveness. At GE, we have solutions on both ends. We have great capabilities for large-scale LNG, and we have an expertise in building modular solutions. As a case in point, for a large-scale LNG project in Australia, we built modules out of our plant in Italy and shipped them, thereby saving significant costs and time for our customer.

We provide compression for large-scale plants, which is the heart of an LNG train. We have modular capability for our largest LNG solution. On the small-scale side, we have complete modular capability, where our preassembled and tested modules (which comprise a large portion of the liquefaction system) are shipped to the site, and the onsite construction company can assemble and commission a complete turnkey train with minimal installation work.

GP. What opportunities do you see for floating LNG, and do you think it will be a key technology trend in the future?

Dandashly. Floating LNG projects, like the Shell [Prelude] project and the Petronas [PFLNG 1] project, are definitely coming. I think they’ll provide flexibility in that, many years from now, when the gas [reserves] are depleted, you can move an FLNG vessel—you don’t have to dismantle it.

We do see that FLNG is an upcoming trend because it provides for that flexibility and modularity, and we are very active in that space, both in our large-scale and small-scale LNG technologies. We’ve supported the Shell and Petronas projects, so we’re active in the major published projects in the FLNG space.

GP. What do you see as the greatest challenges in terms of technology implementation, especially for newer solutions like small-scale processing?

Dandashly. From a technology perspective, I don’t really see that we have any challenges that we can’t overcome with the technology that we have available to us today in the market, and especially inside GE. I think the challenges are more apparent in the speed of adoption, because of all of the different players that need to come in, and they all need to come in at the same time to create that new market.

If we take the example of LNG or CNG for trucking, you need to convert the trucks, you need to build the fueling stations and you need to build the compression stations—essentially, you need to build the whole infrastructure. So, it becomes a question of: How quickly can you bring all the players together that are required to provide the solution? In North America, with the oil price being down and the diesel differential not being there, it will create the additional challenge of slowing that process a bit.

However, I think that, over the long term, the technology adoption is happening. In North America, we have abundant gas, so it will make sense to move heavy-duty trucking, locomotives and marine vessels into that space. It’s just a question of time, and how all of the players will come together to make it happen.

Fig. 3. A small-scale LNG plant in Australia.

The example of what we did with Statoil in the Bakken is a good one. Together with Ferus Natural Gas Fuels (which specializes in moving molecules over hard terrain) and GE Ventures (the GE venture capital team that invests), we were able to bring GE technology to Statoil for use in an entirely different context, solving a new problem, which is flare gas reduction and monetizing natural gas as a fuel for oilfield operations. By doing things like this, we create the catalyst to get the idea moving, and now we’re taking it from the Bakken to other places.

As we look at Sub-Saharan Africa or Asia, we’re looking at not only how to simply sell GE technology, but also how to bring logistics and the other players together so that we can create a total solution.

You have to speed it up. You can’t make everybody wait for somebody else. At GE, we’re good at doing this, and we’re able to bring these parties together to start projects. The partnerships that you need are different in every country, because the players are different. Technology is global, but the logistics and the EPC companies are different everywhere, and you need to have the know-how in each country to do this.

GE Oil and Gas operates in 120 countries. Our scale gives us an advantage. So, when we go to Nigeria or to Angola or to Ghana, there are hundreds of employees already there—people who know the market and who have the relationships with people in that country, or who are from that country—which gives us the ability to move faster in those environments. GP

Hasan Dandashly has served as the president and CEO of Downstream Technology Solutions for GE Oil & Gas in Houston, Texas, since July 2013. He leads GE Oil & Gas’ newly structured business providing products and services in the traditional downstream, industrial and evolving unconventional resources and distributed gas markets. Prior to this role, Mr. Dandashly led GE’s Oil & Gas Global Services business since May 2012, based in Florence, Italy. His career started with Honeywell, where he spent 15 years in leadership roles in corporate research, air transport systems, and the industrial automation and control divisions. Mr. Dandashly joined GE in 1998 as a software products manager for GE’s Intelligent Platforms business. In 2000, he moved to GE transportation, where he ran Train Management Systems, a business offering dispatching and planning systems for freight railroads. Following five years in this role, he moved to Qatar in 2005, where he led the development of the company’s new technology center. In 2007, he moved to GE Energy as general manager for Power Generation Services in the Middle East and Africa, based in Dubai. Mr. Dandashly is a graduate of the Lebanese American University in Beirut, where he obtained a bachelor’s degree in computer science, and of the University of Minnesota in the US, where he received a master’s degree in computer science.